The British Virgin Islands ‘BVI’ is known for being the world’s leading international finance centre in which to incorporate companies. Its innovative and flexible approach to its corporate legislation also extends to its trust legislation and trustee services which has been established in conjunction with the private sector to ensure that it keeps pace with the modern demands on trusts.
The general principles of the trust laws of the BVI originate from those of English trust law. The principles of English common law and equity apply, as supplemented by BVI statute. The original Trustee Act was based on the English Trustee Act 1925 and Variation of Trusts Act 1958 but has now been updated by the Trustee (Amendment) Acts, 1993, 2003 and 2013 amended in 2013.
BVI Trusts can be established by persons in any part of the world with investments or property. Trusts can be discretionary or fixed interest in nature or indeed any other type of trust recognised under English common law. Income from the trust capital can be accumulated for the entire length of the period of the trust and since May 2013 the Trustee Act permits new beneficiary trusts to have a perpetuity period of up to 360 years as an alternative to the old common law period of lives in being plus 21 years.
BVI trusts are on the whole exempt from registration and filing requirements and there are also wide exemptions from taxation in the Trustee Act.
There are further provisions in the Trustee Act which provide statutory recognition to protectors and which permit the reservation of specified powers to settlors of BVI trusts. The statute also includes provisions enabling standard trustee powers to be incorporated by way of reference to a schedule to the Act, thereby enabling the length of trust deeds to be reduced.
Of particular note was the creation in 2003 of the Virgin Islands Special Trusts Act, which has been utilized by Trust settlors looking to ensure that shares in a BVI company settled into a BVI trust can be held on ‘trust to retain’ and the trustee’s duty to retain the shares as part of the trust fund will have precedence over any duty to preserve or enhance their value. The trustee is not therefore liable for the consequences of holding (rather than disposing of) the shares.
The BVI’s Non-Charitable purpose trusts has been particularly useful in the commercial context in order to take transactions off balance sheet, isolating assets in financial deals, separating voting from economic control and (especially) providing ownership structures for private trust companies.
The Financial Services (Exemptions) Regulations, 2007 (the ‘PTC Regulations’) was also introduced in to the BVI to enable unlicensed private trust companies (“PTCs”) to be established in the BVI
A Key provision in the The Trustee Act is the robust, comprehensive and carefully crafted provisions protecting BVI trusts (and dispositions to their trustee) against ‘forced heirship’ claims. These provisions, prevent foreign judgments based on such forced heirship claims from being recognised or enforced in the Territory
Osiris International Trustees Limited hold an unrestricted trust license allowing them to provide the complete range of trustee services from within the BVI. Trust companies operating from within the Islands must conform to strict government regulations and maintain a minimum required capital and are supervised by the Financial Services Commission in accordance with internationally accepted supervision standards.